Schaeffer's Top Stock Picks for '25

Fast Food Behemoth Falters on Earnings Bust

There remains more bullish sentiment to be unwound

Deputy Editor
Jul 28, 2020 at 10:26 AM
facebook X logo linkedin


The shares of McDonald's Corp (NYSE:MCD) are down 1.3% to trade at $198.69 today, after the fast food giant reported second-quarter earnings of 66 cents per share, lower than than Wall Street's estimates of 74 cents per share. This marks MCD's second quarterly earnings miss in 12 months. McDonald's also reported a dip in global sales, down by nearly a third thanks to coronavirus-related lockdown measures, though U.S. comparable sales did come in better than expected. As a result, McDonald's decided to withhold any forecast for its future performance. 

Last time we checked in on McDonald's stock, the company had just rolled back dine-in plans while managing an impressive rally off its March three-year lows. Since then, the equity has enjoyed a rise on the charts, moving back toward annual high territory and above its 320-day moving average. On the other hand, continued COVID-19 measures could continue to take their toll on the fast good giant, who remains down 6.6% year-over-year. Plus, today's dip has the shares once again facing off with their year-to-date breakeven level, a trendline that sits just below the $202 level, which turned away their early June rally.

Meanwhile, options players are optimistic. This is per MCD's 50-day call/put volume ratio of 2.71 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which sits higher than all but 4% of readings from the past year. This indicates that traders have bought nearly three MCD calls for every put during the past 10 weeks, meaning an unwinding of these bullish bets could put more pressure on the shares.

Lastly, this earnings bust has not affected the price of McDonadl's stock contracts, which are still relatively cheap. MCD's Schaeffer's Volatility Index (SVI) of 25% stands higher than just 16% of all other readings from the past year, implying that near-term option traders are pricing in relatively low volatility expectations.

 
 

You have the chance to join one of Bernie's most exclusive programs, complete access at HUGE savings!

As we prepare for a new administration to take the reins in Washington, the near-term market landscape is rife with uncertainty.

The Federal Reserve has already hinted at the turbulence ahead, lowering its interest rate outlook for 2025.

Meanwhile, breakthroughs in artificial intelligence (AI), quantum computing, and other transformative sectors have unlocked incredible profit potential.

But these opportunities are fleeting, and timing is everything. That's where Quick-Hit Trader comes in.

Quick-Hit Trader is designed for precision and speed, getting you in and out of the market in a flash. While other investors scramble to navigate volatile conditions, you'll have access to expertly curated trades that leverage these rapid shifts to deliver explosive profits in short order.

This is your chance to capitalize on the fast-moving market like never before. Are you ready to make your move?

 

 

(function(doc, script) { var js, fjs = doc.getElementsByTagName(script)[0], frag = doc.createDocumentFragment(), add = function(url, id) { if (doc.getElementById(id)) {return;} js = doc.createElement(script); js.src = url; id && (js.id = id); frag.appendChild( js ); }; // Google+ button //add('https://apis.google.com/js/platform.js', async="defer"); // Facebook SDK add('//connect.facebook.net/en_US/all.js#xfbml=1&appId=772755279557744', 'facebook-jssdk'); // Twitter SDK //add('//platform.twitter.com/widgets.js', charset='utf-8'); fjs.parentNode.insertBefore(frag, fjs); }(document, 'script'));